Dax Index News: Tariff Relief Lifts DAX as Investors Eye US Inflation Forecast

DAX Rallies at the Open on Tariff Relief

The DAX Index opened Tuesday, January 14, up 0.67% to 20,268. Investors shifted focus from the Fed to US tariff developments, boosting demand for riskier assets.

US Tariff News Fuels Asian Market Rally

Trump’s economic team reportedly plans a gradual monthly tariff rollout, providing market relief. The incoming Trump administration is reportedly discussing the use of executive authorities to increase tariffs by 2% to 5% each month under the International Emergency Economic Powers Act.

The Hang Seng Index responded positively, rallying 1.89% on hopes for a softer US tariff stance, reflecting optimism in global markets. This potential policy shift could provide much-needed support for German exporters heavily reliant on US demand.

Sector Performance: Auto Stocks Advance on Tariff News

BMW and Mercedes-Benz Group rallied 1.70% and 1.66%, respectively, with Porsche and Volkswagen posting early gains. Autos benefited from the latest tariff news as Germany’s auto sector is a potential US target for tariffs.

Banking stocks joined the auto sector in positive territory on potiential US policy shifts. Commerzbank and Deutsche Bank were up 1.51% and 1.77%, respectively.

US Markets Brace for Inflation Data

US markets delivered mixed results on Monday, January 13, ahead of Wednesday’s crucial US CPI Report. The Dow and the S&P 500 advanced by 0.86% and 0.16%, respectively, while the Nasdaq Composite Index dropped by 0.38%.

Treasury yields remained elevated, with 10-year US Treasury yields climbing to 4.80% – its highest since late 2023. The upswing in yields suggests markets expect a more hawkish Fed rate path. Higher borrowing costs could affect company earnings and valuations.

Key US Data to Watch: Producer Prices in Focus

During the US session on Tuesday, January 14, producer prices could fuel market volatility. Economists forecast core producer prices to increase 3.7% year-on-year in December, up from 3.4% in November.

As a leading indicator for consumer prices, a sharp increase could signal a pickup in inflationary pressures, supporting expectations for a more hawkish Fed rate path. Conversely, an unexpected fall in core producer prices may retrigger hopes for a March Fed rate cut.

Additionally, traders should track Federal Open Market Committee (FOMC) members throughout the Tuesday session. Insights into inflation trends and timings for potential Fed rate cuts could influence buyer demand for rate-sensitive German stocks. FOMC member Jeffrey Schmid is on the calendar to speak.

Near-Term Outlook

The DAX’s near-term trend hinges on US inflation data, central bank commentary, and US tariff developments. Hotter-than-expected inflation or fresh tariff threats could drag the DAX toward 19,750. However, softer inflation and tariff relief could drive the DAX toward its record high of 20,523 on central bank rate cut expectations.

As of Tuesday morning, the Nasdaq-mini futures gained 88 points, leaving German stocks in the hands of US inflation data.

DAX Technical Indicators

Daily Chart

Following the positive open, the DAX sits comfortably above the 50-day and 200-day Exponential Moving Averages (EMAs), affirming bullish price signals.

If the DAX returns to 20,350, the Index could target its record high of 20,523 next. A break above 20,523 would bring 20,750 into sight.

Conversely, a DAX drop below 20,000 could enable the bears to target the 50-day EMA. A fall through the 50-day EMA could signal a drop toward the 19,675 support level.

With the 14-day Relative Strength Index (RSI) at 57.90, the DAX could revisit its 20,523 record high before entering overbought territory (RSI higher than 70).

Final Thoughts

The DAX remains highly sensitive to tariff-related news, economic indicators, and central bank forward guidance. While ECB rate cut expectations and a weaker EUR/USD offer support, traders must closely track US tariff developments and Fed chatter to navigate the evolving market landscape.

Investors should stay updated on global developments here to navigate the ever-changing market landscape.